Volatile Markets and Accumulating Wealth

Today on The Bubba Show, Todd comments on the technical of the market have been swept aside and that there hasn’t been much volatility. He believes that the pattern in about to change and that traders are going to see some volatility which he considers a gift. He sees that it is important for students to understand how you take volatility and turn it into profitable trading opportunities.  Bubba comments on the blowoff trade.

Todd discusses the early release of numbers and how that affects the market. He takes a question from a listener regarding owing hard assets such as Gold. He believes that every investor should have some hard assets in their portfolio. The amount should be proportionate to the risk that an investor can take. He states that any investor can afford to have 10% to 50% of his portfolio in hard assets. 

Bubba comments on the efficiency of market makers, they give nothing away they are very good at their job. Buying options that are far out of the money is a mistake. Those options are either fairly priced or they are expense, they are never cheap. He comments on how premium decays as the options move toward expiration. He notes when you sell credit spreads you have two things going in your favor time and price.

Bubba talks about accumulating wealth in volatile markets. He comments on endowment models for securing wealth. He compares high hands in poker to the markets. They are all probability models but if you get your chips into the pot with a mathematical edge in the long run you are assured of prospering. In the short run anything can happen but if you stay with a sound investment model you are guaranteed success. He discusses farmers and how they can use a dynamic hedge to insure success.